Modernizing transaction banking and payments through AWS Marketplace

Transaction banking is the traditional revenue cornerstone for banks. It includes cash management, corporate payments, liquidity management, and trade finance. Much like the rest of the banking and finance industry, transaction banking is evolving rapidly to adapt to new client expectations. It is also changing to fill the need for increased agility and scalability and meet stricter compliance mandates on a global level. However, legacy technology and operations, such as manual processes, siloed efforts, and batch-processing, can hinder innovation and speed to market.

AWS recently hosted a webinar addressing transaction banking, called How to modernize transaction banking and payments through AWS Marketplace. This 60-minute webinar featured guest speaker Angelos Anastasiou, chief solutions architect for transaction banking at Goldman Sachs, and Esther F. Mendez, worldwide banking and payments partner development lead at AWS. In this webinar, AWS Marketplace and Goldman Sachs shared how transaction banking in the cloud can reduce operational costs and overhead, enhance efficiency, and improve regulatory controls and security.

Transaction banking annual revenues of $1T in 2019 were generated predominately by major banks that have been in the industry for over 100 years. Many of them have acquired competitors over the past decades, so it shouldn’t be a surprise that their banking systems have grown organically in number and complexity. In 2018, there were over 368 billion purchase transactions for goods and services worldwide via credit cards, according to a 2020 research from Nilson Report. Considering this volume for just credit card payments processed, it’s easy to understand why any effort to transform or modernize any of these banks comes with costs and business risks.

However, a recent McKinsey survey among financial services executives reported that 40% of respondents believe their global transaction banking budgets would see significant cuts in the near future. Of those leaders, 95% responded that they are planning to invest more in digital and analytics to create a more tailored and seamless service. And more than half of those executives reported a number one intention to phase out legacy IT frameworks.

The pace of innovation shows no signs of abating. The use of artificial intelligence and open APIs are becoming the norm in helping corporations execute complex transactions or cash management processes with minimal friction. Fueling this are the “digital natives,” people born or brought up during the age of digital technology and therefore familiar with computers and the internet from an early age. Generation Z, born in the late 1990s to early 2010s, and Generation Alpha, born in in the late 2010s to early 2020s, are digital natives. They expect the same high-quality digital experience with the bank as they encounter in non-financial aspects of their lives. The new entrants from banks, financial technology (fintech) companies, and non-financial companies are integrating banking as a service (BaaS) into their own products. This has led to an increasingly competitive environment. And now that marketplaces have global reach, the dynamic regulatory landscape can have much broader effects. AWS and AWS Marketplace offer services that alleviate these pains and enable technological innovation that can change how financial products and services are consumed.

Goldman Sachs launches the GS Transaction Banking platform

In June 2020, Goldman Sachs launched GS Transaction Banking, a fully digital transaction bank that is built 100 percent in the cloud. They built the platform from scratch on AWS to address some major pain points that many banking customers still face today across transaction banking. For example, opening a new bank account can be a lengthy, onerous process that can take days or weeks, with customers providing the same information many times over. Also, banking portals are often not user-friendly, with an outdated interface that leaves users with a poor customer experience. Additionally, the quality of data access can be insufficient, which often forces customers to buy expensive software to meet their day-to-day cash management needs.

GS Transaction Banking is a BaaS product that is easy to integrate, scales well, and is flexible enough to meet partner needs. The platform is a differentiated transaction banking solution that has streamlined the customer on-boarding process, provisioning new accounts in minutes. The BaaS self-serve web interface works across platforms and is available 24/7 with an up-time of 99.5 percent, one of the highest in the industry. The system enables digital wallets to simplify online payments for retail and small to mid-size businesses, and APIs enable partners to leverage their own BaaS programs to onboard and service consumers.

Partnering with the right technology companies has also been key. Goldman Sachs selected Volante Technology, available in AWS Marketplace, as its real-time payment processor. Volante runs natively on AWS and offers authenticated APIs, enabling Goldman to offer value-added services such as just-in-time payment routing, auto-repair capabilities, and more.

Today, GS Transaction Banking runs 100% of its services on AWS, providing a level of security and resiliency that would be very hard to achieve on an on-premises deployment. The AWS global footprint allowed the firm to expand globally and ensure consistent performance across different countries and jurisdictions.

Since its launch last year, GS Transaction Banking has seen strong growth in both BaaS products and the number of direct customers. It has over 250 active clients with more than $30 billion in deposits and has processed over $28 trillion worth of payments across five currencies. Platform usage is expanding to the UK, Europe, and Asia.

Conclusion

Customers across the financial services industry are phasing out legacy IT infrastructure and innovating around BaaS with the help of third-party technology partners. Using AWS Marketplace, Fintech customers such as Goldman Sachs have implemented software and data solutions tailored to meet their transaction banking needs. To learn more about real-life use cases and customer stories, watch the webinar How to modernize transaction banking and payments through AWS Marketplace.

About the author

Esther Mendez leads the worldwide partner business development efforts for AWS in the banking and payments industries. In this role, she’s responsible for strategy, solution development, and go-to-market in partnership with technology companies, consulting firms, and fintech companies worldwide. Esther has 30 years of strategy, business development, product, and marketing experience involving financial services and technology firms.